Federal, Punjab govts’ budgets show increase in outlays at both levels

LAHORE: The federal government and the Punjab government have unveiled their budgets for fiscal year 2026-27, raising total outlays at both levels even as economists caution that higher spending has yet to translate into visible improvements in education, health, agriculture, and industry.

The two budgets have been presented at a time when Pakistan’s economy appears to have regained a degree of stability after several turbulent years, with inflation declining, foreign exchange reserves improving, and concerns regarding an immediate balance-of-payments crisis easing.

At the federal level, the government has presented a budget of approximately Rs18.77 trillion compared with Rs17.57 trillion in FY2025-26, with revenue targets increased to Rs15.26 trillion. Debt servicing continues to consume more than Rs8 trillion annually, while defence expenditure has increased to approximately Rs3 trillion.

Commenting on the budget, prominent economist and Advisor on political and economic affairs to President Pakistan Peoples Party Central Punjab Raja Pervez Ashraf, Rao Babar Jamil said the continuation of programmes such as the Benazir Income Support Programme, with allocations approaching Rs845 billion, reflects the government’s recognition that many households continue to face significant economic hardship. He observed that while inflation has slowed, prices have not actually fallen, meaning the relief felt by ordinary citizens remains limited.

Punjab, meanwhile, has announced a budget of approximately Rs5.9 trillion compared with roughly Rs5.3 trillion in FY2025-26. Notably, the province’s Annual Development Programme has fallen from approximately Rs1.24 trillion to around Rs752 billion, a decline that has raised questions regarding the government’s development priorities going forward.

In this context, the question Punjab’s citizens are entitled to ask is a simple one: where is the performance? If education spending continues to increase every year, it remains unclear why millions of children are still out of school, why parents increasingly rely on private schools despite the existence of a vast public education system, and why employers continue to complain about the quality of graduates entering the labour market.

Similarly, despite substantial healthcare allocations, government hospitals remain overcrowded, and many citizens continue to rely on costly private healthcare out of necessity rather than choice.

Babar said agriculture and industry are also areas that observers believe deserve far greater attention than they have received. Punjab’s farmers continue to face rising input costs, uncertain crop prices, water shortages, and increasing climate-related risks, and the budget could have done more to support farmer productivity through water-efficient irrigation, wider adoption of agricultural technology, crop insurance, and stronger income protection mechanisms for growers.

Punjab remains Pakistan’s largest industrial province, yet businesses operating there continue to grapple with high energy costs, regulatory complexity, limited access to finance, infrastructure bottlenecks, and weakening international competitiveness.

Copyright Business Recorder, 2026